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Is Intel a Buy?

The chip giant's stock should be due for a huge correction after soaring 48% higher over the last year, right? Well, not so fast.

We Intel(NASDAQ:INTC) investors don't have much to complain about these days. The semiconductor giant keeps beating earnings targets like clockwork, the underlying markets for PC processors and server chips are healthier than expected, and Intel shares are trading near multiyear highs. No joke -- Intel shares haven't traded at these prices since the dot-com boom.

But is it too late for investors to join Intel's bandwagon, or add to their existing holdings in the stock? Let's think about that.

Image source: Getty Images.

What the pros say

Wall Street analysts largely agree that Intel is a good investment right now. Out of 28 firms reporting their Intel recommendations to Zacks, 18 have at least a buy rating on the stock today. Only nine analysts suggest a hold rating, and one lonesome firm has a sell grade on Intel. The average price target among these analyst ratings sits at $61.50 per share, roughly 16% above Intel's current market price.

What management says

In the words of Intel CEO Brian Krzanich, Intel is experiencing "an unrelenting demand for compute performance driven by the continuing growth of data and the need to process, analyze, store, and share that data."

These market dynamics feed right into Intel's wheelhouse. The company is at its best when crunching through large data sets on an industrial scale, and Intel's latest lineup of high-end data center chips is keeping analysts on their toes. It's the epicenter of the fundamental business strength that's forcing longtime Intel bears to wave the white flag and raise their price targets.

Looking ahead, Krzanich expects Intel to take a leading role in the upcoming deployment of 5G wireless networks around the world. The company has developed reference-grade modems for preliminary versions of the 5G standards, and should be right there in the vanguard when large-scale deployments start rolling out in 2019.

"When commercial networks begin deploying around 2019, we'll be there with industry-leading products from the core of the data center to the edge of mobile devices," Krzanich said.

Image source: Getty Images.

Isn't the stock overvalued, though?

Intel shares have surged a market-stomping 48% higher in the last 52 weeks. That's often enough to drive even a healthy company's stock out of the investable range.

But even now, you can buy Intel shares at the affordable rate of 14.5 times trailing earnings or 8.3 times EBITDA profits.

In other words, you get a household name running at peak performance, and the stock is still selling at a huge discount to the broader market. It's actually hard to find a large value stock with lower P/E and EBITDA-based valuation ratios than Intel.